A significant market correction is usually triggered by a series of bad news lining up. We have disappointing earnings by bellwethers (AAPL,AMZN), weak jobs report, and Trump's tariff redux. Are we at the beginning of a correction?
trying to decide whether I should close my hedge 
Sure feels like a 5%-10% correction.
The hedge should help you hedge fat negative tail risk so if it only protects for a small loss you might find yourself with costly hedges depending on the hedge. Cost effective risk mitigation is tricky. Human instinct is to close your hedge quickly but i am holding mine. I would not say i expect it to happen on any given week, but I do expect a crash followed by QE and an AI bubble.
And your vote is... 
PS. Will do a AI poll soon in anticipation of PLTR earnings after close Monday
If you force me to vote I would say 5-7%. Basically a very weak correction. I donât really think it has legs. I think this partly because it didnât really show signs of euphoria before the reversal- not that is necessary, but it helps.
This is a classic bearish engulfing pattern, but not a particularly reliable one.
Keep in mind that the odds of a Fed rate cut went up to 87.3% todayâhowever you want to factor that in: FedWatch
Q2 GDP just announced was 3%. Maybe a lagging indicator for those seeing mostly bad news?
I can't really make a prediction with confidence, That is the main reason for my vote.
August and September are the worst months of the year for the S&P500. Fed rate cuts are typically how the big corrections/recessions started. (for example jan 2001 or sep 2007)
Turned out to be a bear trap and 44% of you got it right (I'm including "low will be Monday" as a correct enough). Thanks for your votes. I did close my hedge in time to eke out a 1/3 of the gain.
What can we learn from this? How to identify these traps that the pundits keeps shoveling to investors?
I guess AI is in charge for now, nothing else matters. Until AI demand shows signs of slowing down, nothing will stop this rally.
Anything else?
Cheers
Including being in charge of much of the tradingâespecially at the institutional level. And increasingly even for us P123 members. Sentiment analysis is clearly in the mixâthough more so on the institutional side.
Pretty sure the AIs had a good idea what we were thinkingâjust look at the poll. They had access to the P123 public forum, after all (though to be fair, maybe they didnât bother looking there). But they definitely scanned Twitter, Reddit sentiment, and every Robinhood trade. With Citadel? Possibly most U.S. tradesâwhich gives them a decent read on retail psychology.
Maybe theyâre just waiting for us to drop our hedges before they start shorting.
Paranoid much, Jim?
Maybe Iâll just ask an AI:
Q: If I had given you the poll, would you have looked at sentiment to make your best assessment? And if so, where would you have looked? Would you have used second-order reasoningâthinking about what institutions were thinking about retail investor sentiment?
A: Yesâif you had given me the poll and asked for a real assessment of what was likely to happen next, I would have looked at both sentiment and second-order reasoningâŚThis is often how âbear trapsâ or âfakeoutsâ unfold.
Clearly some âagreeablenessâ in that answerâbut still. 
I loaded up on AI stocks such as Taiwan Semi and Microsoft back in April. I already had some Nvidia and Tesla from back in the day. Hard not to see the potential AI has. We are about to see what happens when limited labor and expertise becomes infinitely copiable code.
Too early to tell in my opinion although people chasing into the close was a good sign. Not making any predictions other than it being too early to tell
I agree. I thought Monday would close up, but I still believe a correction is coming. The market can stay irrational longer than expectedâand timing is everything.
I mentioned a while back that the Fed would likely delay rate cuts. That decision seems appropriate, especially if the goal is to ensure inflation is truly under controlâwithout speculating about other considerations. Still, having tariffs to blame for persistent inflation doesnât exactly hurt their case for holding rates steady, even if it leads to an economic slowdown.
Cramer even dropped the F-word on live TV in response to the Fedâs delay. The Fed is more divided now than itâs been in quite some time. If the sole priority were avoiding a slowdownâwithout lingering inflation concernsâthen maybe Cramerâs frustration isnât entirely misplaced.
I think this is entirely fair to the Fed. A soft landing isnât always possibleâor even desirable. In the 1980s, a slowdown was likely necessary to get inflation under control, and perhaps only a superhuman Fed chairâ or an advanced AI -- could have avoided it.
Hi Marco,
I guess I misinterpreted the poll question, since you have declared the outcome to be a âbear trapâ on Monday, within one business day of the question being asked. I had assumed we were allowing a longer period for the market's direction to be established. Future polls of this type might benefit from the time frame being determined up front.
Corrections typically progress over at least a week (if not multiple weeks) and are usually characterized by a decline of -10% or so, but definitely less than the -20% threshold, which has been arbitrarily dubbed a âbear marketâ by somebody in the dark recesses of financial history.
The S&P 500 is down again today (Tues, Aug 5) after yesterdayâs short-term oversold bounce. Does that mean the âbear trap'sâ spring broke? Personally, I find that chasing the noise in daily prices is highly unproductive to my investment success, so I ignore it.
I expect that stocks will continue to falter and be volatile for at least the next two months. If the market declines, the injury to GDP and US equity prices will have been self-inflicted by the current administration. A combination of high tariffs, mass deportation of essential but low-wage workers, and a growing effort to manipulate macroeconomic data upward may be too much for the marketâs enthusiasm for AI growth stories to overcome. That could lead to a recession in the coming months.
That said, I don't believe we should allow speculation to determine our portfolioâs holdings or exposure. Human intuition and heuristics have been proven to be deleterious to returns, which is why most of us are here, I suspect. Iâll let strategies built with Portfolio123âs excellent feature set make those decisions for me using an entirely quantitative, rules-based approach.
What will happen tomorrow? Thatâs anybodyâs guess â i.e., ânoise.â But after the robust 25%+ run since the April lows, a pullback/correction seems highly likely in the near term (i.e., 1-3 weeks).
Bls data is highly unreliable actually. This has been the case for quite a while. At least 10 years. I also thought of at least a couple weeks to see if the market goes back to ath. Very early to call!
Yes, timeframe needs to be clear. To me the week was all but decided on Monday: decisive rebound + PLTR after close. I can't see anything but an up week.
So are these polls something you want more of? Votes are picking up: 11 votes in the first one and 18 the second one.
Thanks
It would be great if we could keep track of how well people perform on the polls where they make predictions.
I think the current poll questions are fine, but if we want to track performance more systematically, binary questions would make that easier â for example: âWill the market be up or down at the close next week?â
This kind of format would simplify measuring accuracy over time. It might also motivate people to make more thoughtful predictions â especially if thereâs ever interest in using the crowdâs input to inform actual investing decisions.
Iâd definitely participate â at least until it became clear Iâm not very good at predicting. But that might actually be a useful thing to find out. If anything, it could reinforce the idea that Iâm better off just staying invested rather than trying to time the market based on my own forecasts. Who knows â after seeing the results, I might even start using the P123 consensus instead.
And if I am going to consider using these predictions in the future, it would definitely help to know who has done well in the past â and how theyâve voted. Without a track record, itâs just a fun distraction. With one, it might become a useful signal.
It could still be kept pretty informal â like it is now â just part of the forum. It doesn't have to be officially linked to P123. It could be just members having some fun with P123 helping them keep track of their predictions..
We could have a sentiment poll similar to the AAII survey: https://www.aaii.com/sentimentsurvey.
Iâve done some analysis and found that this kind of investor sentiment can be a useful indicator â but mostly when the sentiment is bearish (i.e., when the Bull-Bear Spread is negative). Historically, when the spread is significantly negative, the stock market tends to perform above average in the subsequent period.
Should also be more specific how which market you are referring to, I assumed you where referring to SP500 since you mentioned AAPL and AMZN.
'The AAII Sentiment Survey offers insight into the opinions of individual investors by asking them their thoughts on where the market is heading in the next six months and has been doing so since 1987."
Six months out seems kind of useless to me, it's too far out. Corrections happen fast. Case in point the 2nd highest bearish reading was on Apr 30, well into the recovery from Trump's tariff nonsense.
| Reported Date | Bullish | Neutral | Bearish |
|---|---|---|---|
| Jul 30 | 40.3% | 26.7% | 33.0% |
| Jul 23 | 36.8% | 29.2% | 34.0% |
| Jul 16 | 39.3% | 21.8% | 39.0% |
| Jul 9 | 41.4% | 23.0% | 35.6% |
| Jul 2 | 45.0% | 21.9% | 33.1% |
| Jun 25 | 35.1% | 24.7% | 40.3% |
| Jun 18 | 33.2% | 25.4% | 41.4% |
| Jun 11 | 36.7% | 29.7% | 33.6% |
| Jun 4 | 32.7% | 25.9% | 41.4% |
| May 28 | 32.9% | 25.2% | 41.9% |
| May 21 | 37.7% | 25.6% | 36.7% |
| May 14 | 35.9% | 19.7% | 44.4% |
| May 7 | 29.4% | 19.0% | 51.5% |
| Apr 30 | 20.9% | 19.8% | 59.3% |
| Apr 23 | 21.9% | 22.5% | 55.6% |
| Apr 16 | 25.4% | 17.7% | 56.9% |
| Apr 9 | 28.5% | 12.5% | 58.9% |
| Apr 2 | 21.8% | 16.3% | 61.9% |
| Mar 26 | 27.4% | 20.4% | 52.2% |
| Mar 19 | 21.6% | 20.3% | 58.1% |
| Mar 12 | 19.1% | 21.7% | 59.2% |
